In commonly assigned Paar et al application Ser. No. 887,934 filed July 22, 1986, now U.S. Pat. No. 4,711,934, resin phenol reaction products are described which are theorized to have the following structure: ##STR1## wherein R.sub.1 is a hydrogen atom, an alkyl, aryl or aralkyl radical or a corresponding phenol radical which optionally also contains 1 or 2 [--CH.sub.2 --N(R.sub.2)--CO--NH--R.sub.3 ]radicals, R.sub.2 is the moiety of a compound carrying one primary amino group which has been reacted with a phenol by an amino alkylation reaction, --CO--NH--R.sub.3 is the moiety of a semi-blocked diisocyanate such as toluene diisocyanate, and R.sub.4 is the moiety of an epoxy compound reacted with a phenolic hydroxy group.
It has now been found that the properties of the binders of the aforesaid co-pending application, particularly with respect to crosslinking activity, solubility of the partial protonation products as well as the film formation on electrophoretic deposition can be further improved if the resins, prior to the reaction of the phenolic hydroxy groups with the epoxy compound, are reacted with formaldehyde. It has been established that these reaction products add formaldehyde not only on the reactive sites of the phenol, but also on the urea groups formed through the reaction with the semi-blocked diisocyanate.